The new poverty measure is out, and it’s grim

By Dylan MatthewsNovember 14, 2012

(Michael S. Williamson / The Washington Post)

Officially, the U.S. poverty rate in 2011 was 15 percent exactly, a 0.1 point reduction from 2010. But as I pointed out when that number was released in September, that figure doesn't mean a whole lot.

The official poverty threshold is the amount of money a family of three would have to make to spend less than one-third of their income on food in 1963 and 1964. Seriously. The only changes from a half-century ago have been adjustments for inflation. At no point was the measure changed to account for other costs, like health insurance, transportation, or housing, or to factor in income from transfer programs like food stamps or WIC.

In recent years the Census Bureau has begun developing a "supplemental poverty measure" that lacks these shortcomings. Today, it released the supplemental figure for 2011. Overall, it's higher than the official measure, at 16.1 percent, but for some groups, such as children under 18 and blacks, it's actually lower. By contrast , it's much higher for the elderly (15.1 percent in the supplemental measure, 8.7 percent in the official one) and Asian-Americans (16.9 percent supplemental, 12.3 percent official), and slightly higher for those 18-64, Hispanics, and non-Hispanic whites.

Perhaps the most interesting part of the report is the Census' measurement of how much various government programs and categories of expenses reduce or increase the supplemental poverty rate, which unlike the official rate, the supplemental measure takes into account. Medical expenses are the main expense contributor to poverty, followed by expenses related to work (such as transportation, supplies, etc.), while Social Security is far and away the most important program for reducing poverty, followed by tax credits like the Earned Income Tax Credit (EITC) or the child tax credit (CTC):

Strikingly, Temporary Assistance to Needy Families (TANF) — the program that replaced Aid to Families with Dependent Children (AFDC) as part of welfare reform — has a very minimal impact on poverty, an indication of just how much the 1996 reforms reduced that program's importance. And the Social Security number is especially notable given how much higher the supplemental measure is than the official one for the elderly. It suggests that even with that substantial safety net, the poverty problem among the elderly is much bigger than we thought.